Returns to Education

Education is a fundamental prerequisite for stable labor market integration and economic independence. Empirical research findings show that the monetary returns to education—income from paid employment—have continuously risen in recent decades due to increasing levels of education, while the risk of becoming unemployed has decreased accordingly. Additionally, education is an important determinant of various other areas during youth and adulthood: Higher educated people are physically and mentally healthier, take greater care of their health, and live longer; they are less likely to show deviant behavior during their youth and criminal behavior during adulthood; they are more content with their life and participate more actively in society and politics. Thus, little or insufficient education leads not only to various risks in the lives of individuals, but also to higher costs for society as a whole. Consequently, this has led to a constantly high interest in research on returns to education.


The working unit monitors and studies the complex and dynamic interaction processes that take place when qualifications, competencies, and educational certificates are turned into returns. In data generation and research, emphasis is placed on a variety of economic as well as noneconomic returns to education over the life course. Even though most economic returns to education—such as participation in the labor market or income—will not become evident before adulthood, noneconomic returns—such as health or well-being—can already be observed during school age or even before.


Accordingly, as part of the National Educational Panel Study (project “NEPS Returns”), various instruments are employed that allow for measuring and analyzing different types of returns at various life stages. Moreover, two further research projects study particular aspects of monetary and nonmonetary returns to education using NEPS data. The project “Occupational Sex Segregation and Its Consequences for the (Re-)Production of Gender Inequalities in the German Labor Market” researches the question of how the gender-specific structure of vocational education influences the so-called “gender pay gap”, and how this correlation has changed in Germany since the mid-1970s. The other project “Returns to Education over the Life Course: Well-Being, Social Capital, and Participation in Adult Age (BiLev)” investigates the returns to educational participation, certificates, and competencies in the three interrelated domains: subjective well-being, social capital, as well as social and political participation.